GSR lawyer, accountant claim $567,000 in fees
Unsecured creditors of bankrupt GSR Development LLC might be feeling a bit more "unsecure" these days about ever collecting anything near the $8 million they're owed by the failed Island real estate investment company.
But GSR's lawyers and accountants will apparently be among the first to divvy up the spoils of the company when its properties and assets are eventually sold - and they'll be paid before any unsecured creditors.
Attorney Robert Prosser of the Tampa law firm of Stichter Riedell Blain and Prosser filed for compensation with the federal bankruptcy court April 18, claiming his firm is owed $401,244 for its services as GSR's legal counsel, along with an additional $17,849 in expenses. After Prosser deducted the retainer fee, the claim totaled $412,632.48.
Not to be outdone, GSR restructuring officer William Maloney of St. Petersburg submitted his compensation request, alleging he's owed $153,237.50 for services rendered since Sept. 1, 2006, in addition to $1,900 in expenses.
Maloney claimed he's worked a total of 471 hours at the rate of $325 an hour for GSR since he was hired to restructure the company from complete bankruptcy. According to court records, Maloney's employment with GSR was approved by the court on Oct. 20, 2006.
Together, the two compensation claims total $567,769, an amount GSR currently does not have in cash.
But GSR has substantial Island properties that will eventually be sold. According to bankruptcy court rules, Maloney and Prosser will be paid first before any of the creditors.
As unsecured creditors committee attorney John Anthony said in a statement to the bankruptcy court several months ago, the administrative costs of the GSR bankruptcy are eating up any assets that might eventually go to the unsecured creditors.
At the current rates being charged by Prosser and Maloney, Anthony's words are prophetic. In another six months, GSR's bill to Maloney and Prosser could well be more than $1 million, money that will come off the top of any funds raised through the sale of GSR properties.
But some of the unsecured creditors continue in the belief that they will one day be paid in full for their investments in the now failed real estate empire of GSR principals Robert Byrne and Steve Noriega.
That could be because Maloney has been promised a $125,000 bonus by Byrne and Noriega if he pays all the creditors in full.
That's not likely to happen, according to unsecured creditors Paul Gallizzi and Kent Davis, because GSR properties are mortgaged to the maximum, leaving little, if anything, for the unsecured creditors, once the secured mortgages are paid.
Maloney continues to be unyielding in lowering any of the asking prices in a down real estate market, investor Alan Freeman said recently. To date, not a single GSR property has sold, although there have been several offers, including four bids from Freeman.
Some unsecured creditors, however, refuse to place any blame on Byrne or Noriega and have consistently declined to speak publically about how and why they invested in the company.
Creditors Mel and Carol Yudofsky of Holmes Beach have indicated they would like to tell their tale, but have been advised by their attorney not to make any statements to the media.
Former Holmes Beach resident Patricia Hart has $600,000 invested with GSR, but has declined to return calls to The Islander.
Fred and Phyllis Fechner of Palma Sola are owed $282,000 in an unsecured claim, but when contacted, Phyllis Fechner said she and her husband "have nothing to say to a reporter."
The GSR tale involves a number of people who invested their retirement funds and hard-earned savings, including Bruce and Carole Douglas of Palma Sola, who are owed more than $200,000 by GSR, according to court records.
GSR's bankruptcy is currently at $46 million, making it the largest bankruptcy ever on Anna Maria Island.
Unlike the movie "Jerry Maguire," where Cuba Gooding tells Tom Cruise to "show me the money," the question in the GSR bankruptcy should be "where did the money go?"
Efforts to reach either Byrne or Noriega for comment on where the money has gone have been unsuccessful.
Byrne recently changed his mailing address from the company's Manatee Avenue office to a Bradenton post office box. According to an online blog, he and Kym Jeschke of Chicago plan to marry in Albuquerque, N.M., in the near future.
Byrne's divorce from his former wife Arlene was finalized in March.
Both Arlene and Robert Byrne had submitted claims to the bankruptcy court as unsecured GSR creditors. Those claims total nearly $5.7 million.
Noriega is reportedly living in Tampa and working for an east Manatee housing development project.